Also look to see if the dividend has consistently gone up over a period of years. Take a look at the past performance of a stock and see if the dividend yield has been consistent. Here’s what else you should take into account as you assess stocks.įor one, you want to make sure that the current high dividend yield a company boasts isn’t a fluke. While knowing how to calculate dividend yield can certainly be helpful, investors might run into problems and make mistakes if they rely too heavily on the metric when deciding which stocks to invest in. Simply multiply the quarterly dividend by four to get the annual dividend, and use that figure when calculating the dividend yield for a given stock. Though dividends are often paid quarterly, for the purpose of dividend yield it is important to think about the dividend as an annual amount. If the stock price changes drastically over the course of a market day, the dividend yield would change too. Dividend yield obviously changes as a stock price changes on the stock market, so know that when you use it you are only describing the dividend yield for the stock price at that moment. This can be especially useful if you are a dividend investor looking to use your investments to create income.ĭividend yield is a numerical figure describing the relationship between a stock’s annual dividend payment and its stock price. It is fairly simple to figure out, and knowing the dividend yield for a company you own shares of can help you compare it to the dividend yield of other stocks. To see if you’re getting a good dividend in comparison with other stocks, you’ll need to learn how to calculate dividend yield.ĭividend yield is an expression comparing the price of a company’s stock to the dividend it pays. If you invest in stocks, there is a decent chance that you will receive some sort of dividend, which is a payment to shareholders that is awarded in correlation with how the stock is performing on the market.
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